Consultation launches on gender pay gap reporting

The government has launched a consultation to establish the details of its plans to make it complusory for large employers to publish the average salaries of male and female staff.

The consultation will also look into what information from employers will be published, as well as where and when.

Plans for the new reporting regulations, which will apply to organisations with more than 250 employees, were first announced in March 2015. Prior to this, employers were encouraged to publish information about differences in men and women’s salaries under the 2011 ‘Think, Act, Report’ campaign. However, this was voluntary and organisations could choose what information they made public and where.

In an article published in The Times today (14 July), prime minister David Cameron said that the measure would help to address the gender pay gap.

“Today I’m announcing a really big move: we will make every single [organisation] with 250 employees or more publish the gap between average female earnings and average male earnings. That will cast sunlight on the discrepancies and create the pressure we need for change, driving women’s wages up.

“Transparency, skills, representation, affordable childcare: these things can end the gender pay gap in a generation. That’s my goal.”

Nicola Rabson, global head of employment and incentives at law firm Linklaters, said: “The consultation is a prelude to regulations designed to speed up the rate at which the UK’s gender pay gap (currently standing at 19.1%) closes.

”The consultation is wide ranging and has reopened the question of the size of employers, in terms of employee numbers, which will be required to report, as well as the content, frequency and manner of reporting.

“The most vexing issue is likely to be the level of detail that is required to be published; an overall pay comparison of the pay of an organisation’s male and female employees will provide considerably less information than a job-by-job comparison. Although at this stage there is little concrete action for employers to take, businesses may well be inclined to respond to the consultation.”

Tim Thomas, head of employment policy at manufacturers’ organisation EEF, added: “Businesses will want to ensure that the data they publish on any gender pay gap is not confused with equal pay, with the difference between the two not always obvious and the UK already having had equal pay legislation since 1970.

“Government will need to implement the new rules in a flexible way allowing employers to demonstrate the action they are taking to address any gender pay gap and allow businesses the time to work with their employees to tackle the complex issues surrounding gender pay.”

Kathryn Nawrockyi, gender equality director at Business in the Community, added: “We welcome the government’s intent to close the gender pay gap and will be contributing to the Section 78 consultation along with our member companies.

”We know from our research that while [organisations] that carry out gender pay audits are more likely to have higher numbers of female managers, one in five organisations has never conducted one. It is critical that all employers committed to gender equality undertake a pay audit. We will continue to encourage all employers to get ahead of the Section 78 legislation by carrying out a gender pay audit at all levels of their organisation so that they can set out clear steps on how to close pay gaps that do exist.

“All of this has huge potential to make a difference, so it ultimately comes down to workplace cultures. These must evolve in parallel with legislation and news ways of thinking, so that business practices like flexible working and shared parental leave are normalised. This way we are ensuring that no one, man or woman, suffers from pay or career penalties as a result of parenthood or their gender.”

Consultation will need to take place to discuss exactly how this will happen in practice and no decisions have yet been made on how companies should report data. This does at first glance suggest a positive move towards further ensuring equality amongst staff in the workplace.

However, the devil is (as always) in the detail and so we will need to see exactly what obligations larger businesses will have in disclosing information about pay to properly assess the impact of this plan.

Too general or vague information (such as average pay data for male and female staff employed by the business as a whole) may not actually move us much further and such information is unlikely to help in establishing whether staff are being paid the same amounts for the same work.

While the Government’s proposals to push ahead with this plan are a step in the right direction, we should also continue to look at what else can be done to ensure equality amongst the workforce. For instance continuing to encourage more female senior appointments and the sharing of family related leave (under the new shared parental leave rules) may have a much better practical impact rather than simply tying businesses up in red tape in relation to general data reports.

Dr Clare Lyonette, from the University of Warwick’14th July 2015 at 12:31 pm

Of course it is welcome that the government is introducing new legislation to introduce mandatory reporting on pay for larger organisations, with the purpose of closing the gender pay gap, but there is still a long way to go.

The Equality and Human Rights Commission has been calling for these changes for years. The legislation needs to ensure transparency and a real culture change within organisations, otherwise this may become just another tick-box exercise.

There are also additional issues to address to ensure that women do not fall behind men in the workplace, such as the quality of part-time jobs and the full-time/part-time pay gap; the prohibitive costs of childcare; and any residual gender discrimination within organisations, whereby women are seen to be less committed to work than men.

While the Government’s plan to require large firms to publish the average pay of male and female employees is a welcome move, disclosure of pay is unlikely to prove effective in closing the gender pay gap in the absence of specific procedures that tackle gender pay inequalities.

The existing performance-oriented cultures within most contemporary workplaces further undermine the ability of females with more domestic responsibilities to compete on a level-playing field while attaining a healthy work-life balance. Thus, it is imperative that firms place more emphasis on improving the status of females in the workplace through the promotion of more flexible forms of working that enable them to balance the responsibilities of work and family lives and enable them to reach their true potential.

While higher educational attainment has provided access to better paid jobs for some women, it has not resulted in a reduction in the gender pay gap as much as one might have expected.

In fact, a recent ILO study suggests that while the gender pay gap at lower earnings levels has started to narrow, it has increased in higher-level positions implying that the inclusion of more women in professional and higher paid jobs has not translated into more equal treatment in terms of pay.

Typically, the gender pay gap has been attributed to factors including the undervaluation of women’s work, social norms that reinforce perceptions about female economic dependence, women’s lower investment in human capital, and women’s preference for lower commitment jobs that will allow them to combine work and family responsibilities.

As an organisation who has already embraced this, we think this is a really positive move by the Government and will go a long way to help tackle both the symptoms and underlying causes of gender inequality in the workplace.

Businesses can only tackle gender pay differences if they understand what is happening in their business in the first place, and therefore where they need to focus their efforts. But this is a complex issue and calculating pay averages for the whole workforce won’t necessarily reveal where the issues are.

Therefore the more detailed information companies can publish, including perhaps differences at a grade level and certainly details of actions they are taking to address gender inequality, the better.

Publishing information on gender pay differences externally will create the strong sense of accountability needed for businesses to drive real action. But gender pay analysis is only one of a number of measures that organisations should be monitoring as part of their efforts to make sure their workplace has equal opportunities for all.

At PwC, undertaking an annual equal pay audit is part of our diversity strategy to make sure opportunities are equal for all, irrespective of gender. We know that a sizeable part of the gender pay gap is a result of having fewer women in senior positions, so this is an area where we continue to focus our efforts.

Maggie Stilwell, Managing Partner for Talent for U14th July 2015 at 2:54 pm

Plans announced today will prompt organisations to think about where the issues lie and how best to unlock them.

EY fully supports the focus on the gender pay gap and the move to open reporting. We welcome consultation on how best to measure and report on this issue to help determine an approach that delivers real insight.

Careful consideration needs to be given to other factors at play. For example, a single pay gap figure can be distorted by the continuing challenge of getting more women into senior roles in business.

We are committed to modernising the workplace for the future and are now actively taking steps to understand the extent of the pay gap in our own organisation, the underlying causes and how best to tackle them.

It is encouraging to know that something concrete is being done about the gender pay gap as it is long overdue in this rapidly progressing world.

Demands for equal pay correspond with the lifestyle trends of the 21st Century, in that both men and women are more proactive and goal orientated within the working world and are consequently settling down later.

Here at CV-Library, we are progressively seeing women’s applications for senior roles, suggesting that a gender label shouldn’t be a reason for unequal pay as men and women alike have set their aspirations high in an attempt to advance within their industries.

David Sproul, chief executive and senior partner a15th July 2015 at 2:52 pm

Deloitte supports the proposals announced by the Prime Minister, to require larger companies to publish their gender pay gap data. It marks another important step towards achieving parity, both in terms of pay but also representation, at all levels within big businesses.

Deloitte’s gender pay gap stands at 17.4%, around 2.3% below the national figure. However, when looking across the organisation as a whole the pay gap between male and female employees at each grade is significantly lower, at 1.1%.

This illustrates that for Deloitte, the issue is far less about how we pay our people and more about the number of women employed at more senior grades.

We are determined to improve the retention of women within our firm and our representation of women in senior positions. We have an ambition that 25% of our partners will be women by 2020 and in June we announced the promotion of 22 new female partners.

We have also taken a number of steps to support these objectives, most recently introducing a return-to-work initiative designed to support women back into employment.

We believe that without a representative share of senior female employees average pay will never truly equalise. This is something we are working very hard to resolve.

In our view, the pay gap is as much to do with lower numbers of women in more senior roles as it is about women being paid less for the same work. Companies that are serious about improving diversity and eliminating the gender pay gap need to understand that pay is only one part of the equation.

Companies should revisit their approach to promotion and hiring as much as their pay system to ensure that women and men should be represented more equally in all job functions and levels.

To make this happen effectively the business needs to have a proper culture of diversity and inclusion. For too long these different elements of the business have not worked close enough together for this one aim. We hope the Government’s statement will galvanise businesses and their HR departments into action.